For spirits in western Europe, the strategy’s clear: premiumisation and innovation
Western Europe has long been one of the driving forces of the spirits industry – but political upheaval on the continent threatens established patterns of consumption. You might think that vast swathes of people faced with issues such as Brexit, trade wars, and the rise of populism, would be keen to drown their sorrows… but shifting economic effects could do quite the opposite.
In the case of Brexit, for example, there will be a new set of import and export challenges in play between the UK and the rest of the world. Ulrich Adam, director general of Spirits Europe, an industry trade group, recently said that Brexit was most likely to “affect export expectations outside of western Europe and outside of the EU.”
He continued: “From the figures I have seen, even in terms of a no-deal Brexit, the potential economic impact is relatively minor if you break it down to the spirits sector. Brexit’s effect on the spirits market seems rather to come from a potential clouding in the general economic climate in the UK and in some member states, which will have a knock-on effect for consumer confidence and purchasing power, as opposed to a direct hit to the sector.”
What’s the solution to this cagey market? According to the International Wine and Spirits Record (IWSR), it’s twofold: premiumisation and innovation. The IWSR Vinexpo Report 2012 – 2022 claims that premium spirits are set to outperform the market by a considerable amount, as those drinkers who are financially stable enough to weather economic storms and avoid panicking over spending power continue to increase their consumption. This, combined with a health and wellness trend towards drinking less but better quality, and looking for fresh new experiences, is what will bolster the industry over coming years.
A spokesperson who worked on the report said: “The industry drive to create and market new products year on year is a direct response to the continually changing habits of the consumer. People are drinking differently from the way they drank five, 10 and 15 years ago. Consumer habits have changed even in the past two to three years as part of a trend towards drinking less but better and ‘mindful drinking’.”
Dominion holds a number of spirits companies in its Global Trends Luxury Fund, such as Pernod Ricard and LVMH in its Global Trends Luxury Fund.
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